When court should defer decision on admissibility of document for insufficient stamp duty till final decision of suit?

 We find that the trial court as well as the High Court returned the findings on the bare reading of the power of attorney and observed that since it is a registered document, therefore, it is properly stamped. But the question as to whether in terms of the explanation inserted by the Orissa Act, such power of attorney is liable to be stamped as conveyance, on account of the delivery of possession at the time of execution of power of attorney or thereafter has not been examined.

12. We find that the question whether possession was transferred at the time or after execution of such power of attorney is a question of fact which is required to be decided by the Court at the time of final decision being adjudicated, after evidence is led by the parties and not merely on the basis of recitals in the power of attorney. Such process would be fair and reasonable keeping in view the provisions of Orissa Act.

13. We find that in the facts of the present case, the objection related to deficiency in stamp duty on a power of attorney which the Appellants claim to be conveyance, depends upon the finding regarding delivery of possession in terms of the power of attorney. Generally speaking, such objection is required to be decided before proceeding further. However, in a case where evidence is required to determine the nature of the document, it is reasonable to defer the admissibility of a document for insufficient stamp duty at the time of final decision in the suit.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1627 of 2019 

Decided On: 14.02.2020

Z. Engineers Construction Pvt. Ltd. Vs.  Bipin Bihari Behera 

Hon'ble Judges/Coram:

S. Abdul Nazeer and Hemant Gupta, JJ.

Citation: 2020 SCC OnLine SC 184

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Whether collector should always impose maximum penalty in every case on deficit stamp duty?

The last issue which we must take notice of is the levy of penalty. While it is true that sub section (4) of section 47-A empowers the Collector to impose penalty not exceeding four time the proper stamp duty, the same stands attracted in a case where it is found that the market value of the property was not truly set forth. There must therefore necessarily be an intention to evade payment of duty, which entails the levy of penalty. Secondly the words "not exceeding..." confer on the Collector a discretion to levy penalty dependent upon the facts of each individual case. The mere prescription of a maximum does not necessarily mean that in each case a penalty equivalent to four times the proper duty is liable to be paid. In any view of the matter, the imposition of penalty has serious civil consequences and therefore must be preceded by due application of mind and a consideration of all relevant factors including whether there was an intention to evade payment of duty. We find that the Collector has failed to advert to this aspect also while passing the impugned orders. 
HIGH COURT OF JUDICATURE AT ALLAHABAD 
The Chief Justice's Court
Case :- SPECIAL APPEAL DEFECTIVE No. - 598 of 2015
 Smt. Vijaya Jain V State Of U.P. And 2 Others

Hon'ble Dr. Dhananjaya Yeshwant Chandrachud,Chief Justice
Hon'ble Yashwant Varma,J. 
Citation:AIR 2016 (NOC)449 ALL
Order Date :- 1.9.2015 

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Whether authorities under Stamp Act are bound by rates mentioned in Ready Reckoner?

 It would also be apposite to refer to the Judgments cited by
the learned Government Pleader in support of his contentions that the
rates mentioned in the Ready Reckoner are guidelines to the registering
authority   for   the   imposition   of   stamp   duty.     The   Judgment   of   the
Division   Bench   of   this   Court   in   the   case   of  Solapur   Promoters   and
Builders Association (supra)  was concerning the development charges
which are to be levied under Chapter VI­A of the Maharashtra Regional
Town Planning Act.  The imposition of charges at flat rate regardless of
location of land was challenged on the ground that it was violative of
Article   14   of   the   Constitution   of   India.     In   support   of   the   said
contention, reliance was sought to be placed on the rates mentioned in
the annual statement of rates published by the State Government i.e.

the Ready Reckoner rates.   The Division Bench held that the reliance
placed by the Petitioner in the said Petition on the Ready Reckoner
which   is   device   for   the   purpose   of   imposition   of   stamp   duty   was
misplaced as a Ready Reckoner provides guidelines to the registering
authorities for the imposition of stamp duty which is depending upon
the market value of the property.  Now coming to the Judgment of the
Division Bench of this Court in the case of  Prasadnagar Co­operative
(supra) the quashing and setting aside of the Ready Reckoner rates and
the amendment thereto in respect of the Petitioner's layout situated at
Jaitala, Nagpur was sought.   The Division Bench, whilst allowing the
Petition,   directed   the   Respondents   to   treat   the   Ready   Reckoner   as
guidelines and as a declaration of prima facie market value.
Hence,   by   the   Judgments  (supra),   this   Court   has   treated   the
Ready Reckoner as merely guidelines for the purposes of imposition of
the   stamp   duty,   as   the   same   depends   on   the   market   value   of   the
property.
18) In the instant case, as indicated above, it is an undisputed
fact that the Petitioner's property which is the subject matter of the
Indenture is situated in the “Phoenix Mills Compound” and bears CTS
Nos.1/142, 71 and 109.  The question is whether the said instrument is
to be charged on the basis of Value Zone 12/91 or Value Zone 12/91G

as contained in the Ready Reckoner.  In the said context, it is required to
be noted that by the Value Zone 12/91G all the properties of Phoenix
Mills are covered meaning thereby that the Phoenix Mills Compound is
treated as an entity by itself considering the commercial value of the
properties   situated   therein   and   is   therefore   placed   in   Value   Zone
12/91G which is to be considered whilst adjudicating the stamp duty
that is payable in respect of the instrument which is in respect of a
property   situated   therein.     Hence,   though   the   CTS   numbers   of   the
Petitioner's property are placed in Value Zone 12/91, which attracts a
lesser stamp duty, the Petitioner would be liable to pay stamp duty as
per Value Zone 12/91G as the Phoenix Mills Compound is treated as an
entity by itself and therefore, though a part of the property in the said
Phoenix Mills Compound is placed in Value Zone 12/91, the same is
obviously a mistake which has been corrected by issuance of the letter
dated 10th  January, 2012 of the Deputy Director of Town Planning,
Mumbai.
19) Insofar   as  the   adjudication   by   the   Respondent   No.  1   is
concerned, the fact is that the rates mentioned in the Ready Reckoner
are guidelines to the registering authorities for the adjudication of the
stamp duty, the Respondent No. 1 or for that matter even the Collector
of Stamps would therefore not be bound by the rates mentioned in the

Ready Reckoner and even if there were not to be any correction as in
the instant case, by which correction, the CTS numbers of the Petitioner
are now included in Value Zone 12/91G, the Respondent No. 1 would
still   be   entitled   to   rely   upon   the   said   Value   Zone   12/91G   for   the
purposes of calculating the stamp duty payable on the said Indenture as
the Petitioner's property is undisputedly situated in the Phoenix Mills
Compound.   Hence, there is no question of the amendment to Value
Zone 12/91G being applied retrospectively.  It is required to be noted
that the powers of the authorities under the Stamp Act are wide enough
and cannot be fettered by the rates mentioned in the Ready Reckoner.

IN  THE  HIGH  COURT  OF  JUDICATURE  AT  BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 4036 OF 2013
CR Retail Malls (India) Limited
versus
Chief Controlling Revenue 
CORAM :­ R. M. SAVANT, J.

PRONOUNCED ON :­ JULY 9 , 2014
Citation: 2016(2) ALLMR 289

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Whether it is necessary to see that document is admissible prior to impounding it?

The Apex Court reiterated this aspect in Government of Andhra Pradesh v. Smt. P. Laxmi Devi MANU/SC/1017/2008 : AIR 2008 SC 1640 as follows:

"12. A perusal of the said provision shows that when a document is produced (or comes in the performance of his functions) before a person who is authorized to receive evidence and a person who is in charge of a public office (except a police officer) before whom any instrument chargeable with duty is produced or comes in the performance of his functions, it is the duty of such person before whom the said instrument is produced to impound the document if it is not duly stamped. The use of the word 'shall' in Section 33(1) shows that there is no discretion in the authority mentioned in Section 33(1) to impound a document or not to do so. In our opinion, the word 'shall' in Section 33(1) does not mean 'may' but means 'shall'. In other words, it is mandatory to impound a document produced before him or which comes before him in the performance of his functions."

So at the stage of impounding the document, the trial Court, in my considered view, need not probe into the fact whether the said document will pass the test of relevancy to be admissible in evidence. That aspect can be relegated to a later stage. It must also be noted that the mortgage deed is an unregistered one. Hence, whether the said document can be admitted in evidence for collateral purpose under Section 49 of Indian Registration Act can also be looked into at the time when the document is actually tendered in evidence on behalf of defendant. At that stage the defendant has to convince to the satisfaction of the trial Court that property covered by plaint schedule and mortgage deed is in fact one and the same and it is relevant for the purpose of proving his case and further, the same is admissible in evidence for collateral purpose. Hence, what is pertinent at this stage is only to impound the document and collect the proper stamp duty and penalty under the relevant provisions of Indian Stamp Act. Therefore, impugned order is liable to be set aside.

Equivalent Citation: AIR2016AP10, 2015(6)ALD617

IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH

C.R.P. No. 3003 of 2015

Decided On: 03.09.2015

Trinadha Patro Vs. Lingaraj Rana

Coram:U. Durga Prasad Rao, J.

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Distinction between collateral purpose and collateral transaction for the purpose of stamp duty

The trial court in the present case has anaylsed the true import of “the provisions of the collateral purpose” with reference to the ratio of the judgement in K.B. Saha & Sons Pvt. Ltd., supra. Admittedly, execution of agreement to sell in favour of the respondent-plaintiff by the defendant-petitioner is accompanied by handing over of possession. If the facts of the present case are examined, the suit being for declaration and injunction and the sole basis thereof being the alleged sale deed, which is neither registered, nor stamped on the strength of which the plaintiff claim that defendants parted with possession and handover the possession thereof to the plaintiff, the production of the said document cannot be said to be for collateral purpose. This is because the re-citation therein with regard to transaction of sale is not an independent of or devisable from the transaction for the purpose of which the document is executed, which is required to be registered. Collateral purpose is the purpose which is independent of or devisable from, purpose for which document was executed and of which the law required registration. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating any right, title or interest in immovable property of the value of one hundred rupees and upwards. Section 35 of the Stamp Act has in this regard advisedly used the words “for any purpose whatsoever”, thus the purpose for which the document is sought to be admitted in evidence in the instant case would be relevant for invoking Section 35.

REPORTABLE

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN

BENCH AT JAIPUR

S.B.  CIVIL WRIT PETITION NO.7418/2012

Mahesh Chand vs. Judicial Officer & Ors.

DATE OF ORDER : :   1st May, 2015

HON'BLE MR. JUSTICE MOHAMMAD RAFIQ

Citation; AIR 2015 RAJ141

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Whether document which is not duly stamped can be used for collateral purpose?

Having regard to Section 35 of Stamp Act, unless the stamp duty
and penalty due in respect of the instrument is paid, the court cannot act
upon the instrument, which means that it cannot act upon the arbitration
agreement also which is part of the instrument. Section 35 of Stamp Act is
distinct and different from Section 49 of Registration Act in regard to an
unregistered document. Section 35 of Stamp Act, does not contain a
proviso like to Section 49 of Registration Act enabling the instrument to
be used to establish a collateral transaction.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL NO. 45 OF 2013
ALONGWITH
CIVIL APPLICATION NO. 41 OF 2013
IN
ARBITRATION APPEAL NO.45 OF 2013
DISTRICT : THANE

Shri Jayraj Devidas, Vs  Shri Nilesh Shantilal Tank, 

CORAM : R.D. DHANUKA, J.

PRONOUNCED ON : 22nd AUGUST, 2014
Citation;2014(6) MHLJ 156

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Whether stamp duty is payable on draft sale deed?

Now comes the question of application of Section 35 of the Stamp Act: The purpose underlying the provision is to ensure that no document, which is executed with on an improper or deficit stamp, is received in evidence. Here again, one has to keep in view, the fact that the question as to whether a document was executed on a proper stamp paper, can be verified, if only the execution part of it, has already taken place. If the document, irrespective of its description is yet to be executed, the question of its being subjected to any stamp duty, or levying deficit stamp duty much less penalty, does not arise. The true test would be as to whether on payment of the deficit stamp duty, the document can fit into the description of a document, under the relevant entry in Schedule I-A of the Stamp Act. A draft sale deed does not figure anywhere in Schedule I-A. Therefore, its being subjected to stamp duty and penalty, at this stage, is a step, beyond the scope of the Stamp Act.

Andhra High Court

T.Jai Singh vs Mrs. Pyaro Kaur And Others on 27 June, 2014

Citation: AIR 2014 Hyderabad 19

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Deficiency of stamp duty-procedure to be followed

Hon’ble Allahabad High Court on 4th January 2013 in Civil Misc. Writ Petition No. 57850 of 2009 titled as Gaurav Aseem Avtej Versus The Chief Controlling Revenue Authority, U.P. Allahabad and others has held that both the provisions of revision and appeal are available to an aggrieved person while holding that Sub-section (1-A) of section 56 of the Act as inserted by the U.P. Act No. 38 of 2001 is constitutionally valid. It further held that If a revision is preferred under sub-section (1) of section 56 of the Act then there is no requirement of deposit of 1/3rd of the disputed amount of deficient stamp duty including interest or penalty, if any while filing an application for grant of interim relief.

 it is open for an aggrieved person to either invoke the jurisdiction of the Chief Controlling Revenue Authority under sub-section (1) of section 56 of the Act i.e. by way of filing a revision or under sub-section (1-A) of section 56 of the Act by filing an appeal.

ALLAHADAD HIGH COURT

 Mohd. Aslam And Another Vs Chief Controlling Revenue Authority And 2 Others 

Order Date :- 23.6.2014 

Coram:Hon'ble Pankaj Mithal,J. 

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Procedure to be followed by court when instrument is not duly stamped.

The provisions contained in ss, 33, 34 and 37 of the Act of 1958 in particular, are clear which provide the procedure to be adopted by a Court whenever a question is raised that an instrument is not duly stamped. Whenever such instrument is tendered in evidence, the Court has to impound it as obligated by Section 33 and then proceed as required by Section 34. That section empowers the Court, to recover deficit stamp duty alongwith penalty. Section 33 provides that if a person having by law authority to receive evidence and the Civil Court is one such person before whom any document chargeable with duty is produced and it is found that such document is not duly stamped, the same has to be impounded. The duty and penalty has to be recovered according to law. Section 34 prohibits its admission in evidence till such duty and penalty is paid. Therefore, unless the stamp duty and penalty is paid, such document is not admissible in evidence. In other words, such document cannot be received in evidence and the opposite party cannot be invited to cross-examine the witness in respect of such document.

Bombay High Court

Conwood Agencies Pvt. Ltd. vs Namdeo Pandurang Panchal And Anr. on 21 October, 2004

Equivalent citations: (2005) 107 BOMLR 319

Bench: D Bhosale

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Whether possession of a document not duly stamped is by itself any offence?

An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence and it cannot be acted upon by that person or by any public officer. This is the penalty which is imposed by law on the person who may seek to claim any benefit under an instrument if it is not duly stamped. Once detected the authority competent to impound the document can recover not only duty but also penalty, which provision, protects the interest of revenue. In the event of there being criminal intention or fraud, the persons responsible may be liable to be prosecuted. The availability of these provisions, in our opinion adequately protects the interest of revenue. Unbridled power available to be exercised by any person whom the Collector may think proper to authorize without laying down any guidelines as to the persons who may be authorized and without recording the availability of grounds which would give rise to the belief, on the existence where of only, the power may be exercised deprives the provision of the quality of reasonableness. Possessing a document not duly stamped is not by itself any offence. Under the garb of the power conferred by Section 73 the person authorized may go on rampage searching house after house i.e. residences of the persons or the places used for the custody of documents. The possibility of any wild exercise of such power may be remote but then on the framing of Section 73, the provision impugned herein, the possibility cannot be ruled out. Any number of documents may be inspected, may be seized and may be removed and at the end the whole exercise may turn out to be an exercise in futility. The exercise may prove to be absolutely disproportionate with the purpose sought to be achieved and, therefore, a reasonable nexus between stringency of the provision and the purpose sought to be achieved ceases to exist.

Supreme Court of India

Distt. Registrar & Collector, ... vs Canara Bank Etc on 1 November, 2004
Bench: Cji R.C. Lahoti, Ashok Bhan

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